Golden Oak Antique Shop had the following account balances at the end of the current accounting period: The normal gross profit for the company is $45%. What was the company's estimated cost of goods sold for the accounting period?

Question

Golden Oak Antique Shop had the following account balances at the end of the current accounting period:  The normal gross profit for the company is $45%. What was the company's estimated cost of goods sold for the accounting period?

Quizplus · Accepted Answer

To calculate the estimated cost of goods sold, we need to first calculate the estimated revenue. 
Estimated revenue = Beginning inventory + Purchases - Ending inventory
 = $50,000 + $75,000 - $54,000 = $71,000

Then, we can calculate the estimated cost of goods sold using the gross profit percentage: 
Estimated cost of goods sold = Estimated revenue - Gross profit 
= $71,000 - ($71,000 x 0.45) 
= $48,125

Therefore, the answer is C ($48,125).

Golden Oak Antique Shop Had the Following Account Balances at the End